Mall owners continue to count Covid-19 losses as property valuations tank and tenant failures stream in.
But Equites Property Fund is among the few landlords watching the surge in e-commerce with a smile.
The owner of the Waterfall Precinct specialises in the top-end of the logistics sector and owns last mile distribution centres and warehouses in the UK and South Africa, whom it credited for the 99% rental collection at a time when most landlords are forced to nurse their ailing clients.
Equites had not recorded any tenant failures in the six months to 31 August and, in the UK, where it has a much bigger portfolio than in SA, rental collections remained at 100% throughout the lockdown period between March and August.
Riding the e-commerce wave
"We are massive beneficiaries of tailwinds that are coming up in the UK on the back of e-commerce. Online sales are currently levelling off at about 26% of all sales. But we did hit a peak at the heart of Covid lockdown of 33%," said CEO Andrea Taverna-Turisan.
The Equites team in the UK say there is a consensus that online sales will increase to about 50% of all sales in the next five to 10 years.
Big logistics companies, like DHL and DPD, are expanding their warehouse facilities, while e-retailers, like Amazon, need more last mile distribution centres and parcel return hubs.
Equites said Amazon was responsible for almost a third of the landlord's space that has been taken up in 2020.
But the potential market for landlords focused on logistics and warehousing goes beyond the surge of online retail.
Following the disruption in global supply chains, when China was closed for business in the initial phases of the pandemic, the Equites team says more companies have brought their production home, expanding the company's potential market beyond "e-retailing and parcels".
In SA, big retailers have also reported record growth in online sales in the 24 weeks ended on 31 Aug 2020 - Dischem's online sales were up 344%, Game Stores recorded a 100% increase, Makro grew by 84% and Mr Price was up 75%.
Taverna-Turisan was quick to caution against comparing growth in SA e-retailing to the UK's, because it came from a very low base, but he said the changing rules of the game were also going to affect landlords' decisions much more than in the past.
"A lot of decision-making around real estate is not being driven by e-commerce yet in South Africa, whereas in the UK it is. But with this level of growth, we would approach the need to make real estate decisions for e-commerce a lot sooner than we anticipated a year ago." - Andrea Taverna-Turisan.
John Loos, property sector strategist at FNB Commercial Property, surveyed commercial property brokers in the third quarter of 2020.
Industrial and warehouse property brokers were the least pessimistic about the prospects of the industry that has been largely hammered by Covid-19 restrictions.
Expected demand for space from small businesses, who would find the relatively affordable rental rates of industrial property appealing during the current environment, and increased need for warehouse space as online retail grows, were some of the things that made brokers more optimistic about the future of this segment of real estate.
"Industrial property is thus not seen by brokers as being a victim of technological progress that could reduce demand for space, such as is the case in the office (due to remote work) and retail property (due to online retail)," wrote Loos.
Because of expected tailwinds in the warehousing, logistics and industrial property sector, Equites is forging ahead with a number of warehouses it is currently developing in the country in industrial areas, like Meadowview in Gauteng as well as Philippi and Airport Industria in the Western Cape.
The company is also ready to grab acquisition opportunities with the R1.1 billion of cash it had at the end of August.